Toronto-listed miner Tiomin Resources says the Kwale titanium project, in Kenya – which has just emerged from debilitating postelection violence – remains under force majeure while the government of the East African country completes the remaining conditions likely to be required by lenders.

However, Tiomin CEO Bob Jackson says he is confident that Kwale will ultimately be developed, but notes that “bureaucratic processes are unpredictable and often take longer than expected”.

Kwale was financed and ready to start construction in 2006, but bureaucracy prevented the company from gaining access to debt finance.

“Our prior experience means that we will not attempt to restart Kwale until the Kenyan government meets all the lenders’ previous conditions. In the meantime, we have slashed our costs in Kenya while we wait for the Kenyan government to act and have appointed Joyce Misoi, who formerly managed Tiomin’s investor relations, to advise on political developments in Kenya.

“Various parties have approached us about Kwale and our options include another attempt at building Kwale ourselves, a partial sale or an outright sale. Each alternative has risks and advantages and we will continue to evaluate our choices,” says Jackson.

Tiomin finance director Jim O’Neill tells Mining Weekly that a decision was taken in December to reduce costs in Kenya. On January 7, termination notices were given to all staff that, effective March 31, their services would no longer be required.

He adds that a number of staff, including the GM, were retained in order to provide care-and-maintenance activities, as well as security and liaison with the Kenyan government.

“The major challenge has been the lack of timelines of the Kenyan government to meet its obligations regarding access to land, infrastructure improvements and various licensing issues, and resolving the issue of resettlement of the communities to be affected by the project. The postelection violence and disruptions in Kenya have also had a negative impact on international investment sentiment towards Kenya, complicating our task.

“The political disruption clearly delayed an already slow process. “However, the Kenyan government is now making progress on its tasks, which should improve Tiomin’s ability to get other potential investors interested in the project again,” says O’Neill.

He reiterates that the company believes that Kwale is a viable project, but notes there are obvious risks associated with any new mine and a construction timeline of 18 months. The risks include foreign exchange rate fluctuations, potenial capital cost escalation, and political instability in Kenya.

Tiomin has had discussions with China’s Jinchuan Group and other groups regarding their interest in developing Kwale.